By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee could face downward pressure on Friday on heightened risk aversion stemming from U.S. tariff uncertainty, compounded by its failure to breach a key level.
The 1-month non-deliverable forward indicated that the rupee will open flat-to-slightly-lower to the U.S.
dollar from 87.1150 in the previous session.
The rupee had inched past 86.90 on Thursday before importers stepped in to take the currency back past the 87 level.
The fact that the currency was not able to sustain past 87 reflects the extent of hedging interest when the dollar/rupee pair had a “decent dip”, a currency trader at a bank said.
“Yesterday’s price action halted the potential for a substantial drop (in the dollar/rupee pair), unless U.S. job numbers (on Friday) are a major surprise,” he said.
Asian shares were down on the day following a selloff in U.S.
equities. The S&P 500 index dropped 1.8% and the Nasdaq slipped into correction territory amid more announcements from U.S. President Donald Trump on tariffs, which analysts said was fanning uncertainty.
Trump on Thursday exempted goods from both Canada and Mexico under a North American trade pact for a month from the 25% tariffs that he had announced earlier this week.
“Confusion reigns around the Trump Administration policy agenda”, impacting risk, Chris Weston, head research at Melbourne-based broker Pepperstone, said.
Amid this, a poor U.S.
non-farm payrolls report in the session ahead “will not be tolerated by risk markets and will likely see an outsized reaction” in U.S. Treasury and swaps markets.
The U.S. jobs report is expected to have added 160,000 jobs last month, per a poll conducted by Reuters.
The survey comes on the back of a string of data releases that have indicated that the U.S. economy is slowing down.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 87.32; onshore one-month forward premium at 18.75 paise
** Dollar index down at 104.06
** Brent crude futures up 0.3% at $69.7 per barrel
** Ten-year U.S.
note yield at 4.26%
** As per NSDL data, foreign investors sold a net $217 million worth of Indian shares on March 5
** NSDL data shows foreign investors bought a net $95.6 million worth of Indian bonds on March 5
(Reporting by Nimesh Vora; Editing by Sonia Cheema)
